auction

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Auction

1. A way to sell an item in which a moderator takes bids from a number of persons for a period of time and ultimately sells to the highest bidder. For example, the moderator (called an auctioneer) may set the opening bid at $5 and, once someone offers to pay $5, may incrementally increase the requested bids until they stop. Variations on an auction may involve any number of things; for example, a person with more than one job offer may request higher salaries in turn and then finally take the highest paying position. See also: Bidding war.

2. See: Auction market.

auction

a means of selling goods and services to the highest bidder among a number of potential customers. Auctions can take several forms. One form is an open auction – increasing bid – competition in which the bids of all parties are observable and bidders drop out as the price increases until only the highest bidder remains. Another form is an open auction -decreasing price – auction in which the auctioneer starts off from a very high price that is then slowly decreased until one bidder agrees to buy at the last announced price. This form of auction is often called ‘Dutch auction’. Yet another form is a sealed-bid, closed auction in which all bidders have to submit their bids in sealed envelopes at the same time. In open auctions, bidders can gain some information about the private valuations that other bidders place upon the goods to be sold, while in sealed-bid auctions the private valuations of bidders remain unobservable.

The principles of auctions apply to situations where firms seek TENDER to supply products.

auction

a means of selling goods and services to the highest bidder among a number of potential customers. Auctions can take several forms. One form is an open auction, increasing bid, competition in which the bids of all parties are observable and bidders drop out as the price increases until only the highest bidder remains. Another form is an open auction, decreasing price, auction in which the auctioneer starts off from a very high price that is then slowly decreased until one bidder agrees to buy at the last announced price. This form of auction is often called a ‘Dutch auction’. Yet another form is a sealed-bid, closed auction in which all bidders have to submit their bids in sealed envelopes at the same time. In open auctions, bidders can gain some information about the private valuations that other bidders place upon the goods to be sold, while in sealed-bid auctions the private valuations of bidders remain unobservable. The principles of auctions apply to situations where firms seek tenders to supply products.

auction

A sales technique in which real or personal property is offered for sale and bidders make oral offers in varying amounts until one is accepted. Frequently used for involuntary transfers of real estate, such as foreclosures and tax sales. In some states, foreclosure auctioneers must be licensed.Where property is offered by the owner voluntarily for auction sale,the fine print in the auction terms usually contains a provision for a buyer's premium. The amount of the winning bid is automatically increased by the stated amount, and that percentage is used to pay the auctioneer's fees.

References in periodicals archive ?
Can Double Auctions Control Monopoly and Monopsony Power in Emissions Trading Markets'?
They try to finesse the problem by comparing NYSE close-to-close price changes to open-to-open changes, noting that the opening price is set in a clearinghouse institution while the rest of trade is double auction.
In the first study, the authors find that a computerized double auction performs better than the alternative institutions in terms of allocational efficiency and speed of price convergence, with the exception of possibly superior performance by a recontracting version of the clearinghouse institution.
These studies employed the double auction institution exclusively; only very recently has the clearinghouse been examined in laboratory asset markets.
Existing theory provides some insight into the double auction and clearinghouse institutions, although few direct comparisons.
Theoretical analysis of the double auction institution is a formidable task because offers to buy and sell may convey important information in continuous time.
A previous paper, Kyle [1985], considers the process by which a double auction trader with superior information extracts maximum surplus over time.
In double auction markets, a rich public information set is generated as both buyers and sellers enter and accept publicly displayed price quotes within trading periods.
Figures 2, 3 and 4 display the time series of mean contract prices for the double auction experiments, posted offer experiments with computer-simulated buyers, and posted offer experiments with human buyers, respectively.
Examination of the four double auction experiments in Figure 2 reveals that our double auction markets generated price deviations of approximately the same magnitude as HLV.
In fact, mean prices in the posted offer experiments were often much higher than in the double auction experiments.
In summary, we find that contract prices deviate from the competitive equilibrium price in the direction predicted by the successful exercise of market power by sellers in both our double auction and our posted offer experiments.